ASX warns of 'dark pool' trading

THE Australian Securities Exchange has warned of increasing risks of sharp swings in the stockmarket with the rise of ultra-fast trading technology taking place on dark pool trading venues.

The comments come just days after Wall Street was hit with another high-tech trading glitch when a series of errant trades triggered sharp swings in stocks across the New York Stock Exchange.

The ASX raised the risks of the trading in its submission to the Australian Securities and Investments Commission review over rules to regulate the flow of trading away from the public exchanges into so-called ''dark pools''.

Dark pools are orders to buy or sell shares set up by brokers or specialist firms that are not submitted to transparent ''lit'' markets, such as ASX and Chi-X.

Dark pools already account for about 30 per cent of total Australian trading volume, and ASX has said the high-frequency computer-based traders operating inside them are effectively operating under limited regulation.